VW’s $15B Diesel Settlement Might Actually Hurt Electric Cars

It’s just about judgement day for Volkswagen, which has admitted rigging its diesels to spew more pollution than the law allows. Tuesday, US District Judge Charles Breyer will decide whether to approve the $15 billion settlement VW struck with the Department of Justice. But some worry the agreement could harm the electric car industry it is meant to promote.

The settlement, covering 2.0-liter diesel cars sold in the US, addresses three points. Das Cheater will spend $10 billion compensating the poor souls who bought half a million dirty diesels between 2009 and 2015. It will provide $2.7 billion to mitigate environmental damage, which The Guardian estimates at about a million tons of air pollution worldwide.

And VW will allocate $2 billion to finance EV education programs and charging infrastructure. But some worry that what appears to be poetic justice—punish VW by making it support cleaner technology—could crush competitors and give the automaker control of a growing market.

Chargepoint CEO Pasquale Romano says the deal effectively demands that VW dominate the market for charging infrastructure. Chargepoint is the country’s largest provider of charging stations, with more than 30,000 locations. Since its founding nine years ago, the company has raised $173 million. VW must spend more than 10 times that amount in the next decade. “You just handed them $2 billion of Monopoly money,” Romano says.

Chargepoint isn’t the only victim, Romano says. The settlement specifies that VW cannot do what Tesla Motors did and give its cars a proprietary charger connection with a dedicated network of charging stations for customers. Beyond that, VW can choose what sorts of chargers it builds (Level 2, fast charging, or other), and where to install them.

Chargepoint is getting it in the neck. John Alan James, chairman of the Center for Global Governance, Reporting, and Regulation at Pace University

California, where VW must spend $800 million, has some say in VW’s infrastructure plan, but VW is largely free to do as it pleases everywhere else. What’s more, the settlement dictates that VW spend $500 million every 30 months. Romano worries that VW almost certainly will select a handful of vendors and technologies early on and pour its money into them. That could frighten investors in those companies that don’t get the nod from VW.

Volkswagen and the Environmental Protection Agency declined to comment. The Department of Justice rejected Romano’s concerns in a court filing last month, saying the deal allows for competition, according to Reuters.

Chargepoint is one of 28 companies and organizations that signed a letter to the DOJ saying, “The agreement shouldn’t pick winners and losers, especially given that this emerging market transition will in no small part define 21st century transportation.” They call for an independent regulator to ensure VW’s spending doesn’t crush competition.

“Chargepoint is getting it in the neck,” says John Alan James, chairman of the Center for Global Governance, Reporting, and Regulation at Pace University in New York. He calls this an example of the government “picking winners”—or, rather, making VW pick winners. “I don’t think it’s good public policy, and I think it’s a legacy issue,” a departing administration striking a deal to lock in a technology it supports.

Not everyone is so upset. EVgo, which operates some 800 fast chargers around the country, did not sign the letter to the DOJ. “VW has an opportunity to do something really terrific for the entire industry,” says Terry O’Day, the company’s head of product strategy.

Expanding the infrastructure that supports EVs benefits everyone, he says, and the VW deal isn’t the end of the road. “This will transform the industry, but it won’t complete the transformation.” Because ultimately, the market will need far more than $2 billion and 10 years to meet the needs of a growing market for electric vehicles.